DRAM up, telecom chips down – Infineon

Big losses

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Infineon blamed a deteriorating market for telecom chips for a pretty awful quarter. An upturn in DRAM prices and demand was not enough to compensate for the depressed state of what the company calls "wireline communications".

But the performance of Infineon's memory products group shows that the company and DRAM market still has a long way to reach profit. Memory revenues in Q1 were Euro 285m, 18 per cent up on the previous quarter, but 43 per cent down on the same period last year. Earnings before interest and taxes were Euro 371m, better than the loss of E522m in the previous quarter (although inventory writedowns account for much of the latter figure). EBIT in Q1,2000 was Euro 66m.

Group sales for Q1, 2002 (ended December 31, 2001) were down five per cent on the previous quarter and 38 per cent down on the same period in FY2001.

The German chipmaker recorded a Q1 net loss of Euro 331m, better than the previous quarter loss of Euro 280m, but well down on net income of Euro 280m for Q1,2000. It attributes the loss "mainly due to continued price pressure". This includes erosion on memory prices from mid-November.

Presumably, the next quarter will see the company benefit more from the uptick in DRAM prices. And sure enough, Infineon detects the "first positive signs in demand for mobile communication products and pricing for memory products as well as relatively stable demand in chips for automotive and industrial applications".

But the performance of Infineon's memory products group shows that the company and DRAM market still has a long way to reach profit. Memory revenues in Q1 were Euro 285m, 18 per cent up on the previous quarter, but 43 per cent down on the same period last year. Earnings before interest and taxes were Euro 371m, better than the loss of E522m in the previous quarter (although inventory writedowns account for much of the latter figure). EBIT in Q1,2000 was Euro 66m. ®